USF Insurance Co. v. Langlois

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13-P-1387 Appeals Court

USF INSURANCE COMPANY vs. DAVID LANGLOIS & others, 1 trustees, 2
& others. 3

No. 13-P-1387.

Essex. May 6, 2014. - July 22, 2014.

Present: Rapoza, C.J., Brown, & Berry, JJ.

Insurance, Fire, Business owner's policy, Construction of
policy, Insured, Illegal acts exclusion. Contract,
Insurance, Construction of contract.

Civil action commenced in the Superior Court Department on
December 23, 2010.

The case was heard by James F. Lang, J., on motions for
summary judgment.

Mark I. Zarrow for the defendants.
Thomas M. Tang for the plaintiff.

1
Robert Langlois, Bruce Langlois, and Richard J. Langlois.
2
Of the Langlois Family Realty Trust, also known as the
Langlois Family Trust.
3
Smith's Tavern, Inc. of Haverhill, also known as Smith's
Tavern of Haverhill, Inc.; and David Langlois, Robert Langlois,
Bruce Langlois, and Richard J. Langlois in their capacities as
directors of Smith's Tavern, Inc. of Haverhill.
2

BROWN, J. The defendants appeal the declaratory judgment

allowing the plaintiff's motion for summary judgment. We

affirm.

1. Background. The facts giving rise to this action are

undisputed. In 1983, the Langlois Family Realty Trust (trust)

was formed to hold legal title to real estate in Haverhill.

Richard A., Robert, and David Langlois were the original

trustees, and Richard J. and Bruce Langlois were, respectively,

first and second successor trustees. 4 Richard A. passed away in

1988; however, the trust provided that David and Robert would

continue as trustees and that Bruce would only serve as trustee

upon the deaths of the original three. Robert, David, Richard

J., and Bruce were named the beneficiaries, as joint tenants

with rights of survivorship. 5

Smith's Tavern, Inc. of Haverhill (corporation) leased a

building owned by the trust. Robert, David, Richard J., and

Bruce all served as directors of the corporation. 6 The

4
Richard A. is the father of Robert, David, Richard J., and
Bruce.
5
We note that on April 4, 2012, the trust was modified,
removing Bruce as a successor trustee and as a beneficiary.
6
We note that as of March 1, 2011, Bruce was removed as a
director of the corporation and that in or about April, 2012,
Bruce transferred his shares of stock to the corporation.
3

corporation operated as a bar and restaurant. David and Robert

managed the restaurant; Bruce worked as a bartender.

In July, 2010, the plaintiff, USF Insurance Company, issued

an insurance policy with the "Named Insured" listed as "LANGLOIS

FAMILY TRUST AND SMITH'S TAVERN OF HAVERHILL, INC." The policy

provided a coverage limit of $20,000 for loss of business

personal property and a coverage limit of $150,000 for loss of

the building. The policy also contained an exclusions

provision, explaining that the plaintiff would not pay for loss

or damage caused by "[d]ishonest or criminal act[s] by you, any

of your partners, members, officers, managers, employees . . . ,

directors, trustees, . . . or anyone to whom you entrust the

property for any purpose."

On November 12, 2010, Bruce set fire to the building leased

by the corporation and was charged with arson. He pleaded

guilty, confessing that he acted with animus towards his

estranged brothers. The loss was reported to the plaintiff,

which then brought this declaratory judgment action to determine

its coverage obligations under the policy. 7 On cross motions for

summary judgment, the judge ruled in favor of the plaintiff,

concluding that due to Bruce's act, both the corporation's and

7
The complaint named as defendants the trust, the
corporation, and Robert, David, Richard J., and Bruce in their
capacities as trustees of the trust and directors of the
corporation.
4

the trust's interests were subject to the exclusions provision

of the policy. This appeal ensued.

2. Discussion. a. The policy. As "[t]he interpretation

of an insurance contract is not a question of fact for the

jury," summary judgment is appropriate. Cody v. Connecticut

Gen. Life Ins. Co., 387 Mass. 142, 146 (1982). Therefore, we

review the matter de novo to determine "whether the evidence,

viewed in the light most favorable to the nonmoving party, shows

that the moving party is entitled to judgment as a matter of

law." Albahari v. Zoning Bd. of Appeals of Brewster, 76 Mass.

App. Ct. 245, 248 (2010) (footnote omitted).

On appeal, the defendants allege various ambiguities in the

insurance policy. As a threshold matter, we note that

ambiguities in an insurance policy are resolved against the

insurer, in favor of the insured. Chow v. Merrimack Mut. Fire

Ins. Co., 83 Mass. App. Ct. 622, 630 (2013). Alternatively, if

the language in the policy is unambiguous, its terms will be

construed according to their plain meaning. Sullivan v.

Southland Life Ins. Co., 67 Mass. App. Ct. 439, 442 (2006).

When they executed the policy, the defendants understood

that the trust's building and the corporation's personal

property were being insured. See Hazen Paper Co. v. United

States Fid. & Guar. Co., 407 Mass. 689, 700 (1990) (when

construing insurance policy, we consider "what an objectively
5

reasonable insured . . . would expect to be covered").

Accordingly, the defendants understood that both the trust and

the corporation were named insureds under the policy. See

Jacobs v. United States Fid. & Guar. Co., 417 Mass. 75, 78

(1994) ("'Named insured' has a clear and explicit meaning. It

is the individual or entity who is listed on the declarations

page"). The fact that "Named Insured" is listed in singular

form on the declarations page is not material and does not

present an ambiguity.

Likewise, the policy's "BUILDING AND PERSONAL PROPERTY

COVERAGE FORM" defines the terms "you" and "your" throughout the

policy to mean the "Named Insured shown in the Declarations."

Applying this definition, the policy excludes coverage to the

named insured whose dishonest or criminal act causes loss or

damage to the insured property. The defendants understand this,

evidenced by the fact they concede that the corporation is

barred from recovering for damages to its personal property, as

Bruce was a director of the corporation at the time he committed

the arson.

b. Innocent coinsured. The defendants' principal argument

on appeal is that the trust, the innocent coinsured, should not

be barred from recovering insurance proceeds for the loss of the

building. This issue is controlled in material respects by the

reasoning in Kosior v. Continental Ins. Co. 299 Mass. 601
6

(1938). There the court held that if the coinsureds' interests

in an insurance policy are joint and nonseverable, the innocent

coinsured may not recover fire insurance after the blamable

coinsured intentionally burned the covered property. See id. at

604 ("Cases dealing with policies which by their express terms

permit of a severance of interest of the insured are not in

point"). See also Yerardi v. Pacific Indem. Co., 436 F. Supp.

2d 223, 248 (D. Mass. 2006) ("Kosior may not apply to cases

where the insureds' interests and obligations under the relevant

policy are severable").

We think the judge properly determined that there was no

genuine dispute that the trust's and the corporation's interests

were "inextricably intertwined" and thus nonseverable. At the

time of the fire, all four brothers were directors of the

corporation, each sharing a twenty-five percent ownership

interest, and two of the four brothers (Robert and David) were

named trustees of the trust with the other two brothers (Richard

J. and Bruce) listed as successor trustees. In addition, all

four brothers were named beneficiaries of the trust, each

holding joint interests with rights of survivorship. Moreover,

the policy goes further and excludes recovery for loss or damage

caused by "anyone to whom you entrust the property for any

purpose." Though the Langlois family attempted to cover their

bases by listing the trust and the corporation as separate
7

entities in the policy, it still follows that the trust

entrusted the corporation with the care of the building.

Consequently, despite the trust's innocence, Bruce's intentional

arson left the entire insurance policy subject to the

exclusionary provision. See Kosior v. Continental Ins. Co.,

supra at 604 (husband unilaterally "burning the insured

buildings was an act of the 'insured,' . . . which rendered the

policies void in accordance with their terms").

c. Standard form policy. We do not address the

defendants' argument regarding the Massachusetts standard form

policy because this issue was raised for the first time on

appeal and therefore is deemed waived. See Martins v.

University of Mass. Medical School, 75 Mass. App. Ct. 623, 634

n.17 (2009).

Judgment affirmed.